Trend: Technology Levels the Playing Field

Technology is making small businesses competitive in markets once thought to be the exclusive territory of larger corporations. This trend will grow stronger as common software platforms such as Microsoft Windows/Office combine with the Internet and low-cost, easy-to-use communications to reduce expenses, increase market reach, and push the envelope of creativity.

The Internet has shoved aside expensive libraries and information publishing services as the dominant sources of business intelligence. It lets small businesses quickly research their markets, find critical information, and stay on top of the latest trends. All for a fraction of what it would have cost just a few years. Research that was once beyond the budgets and staffing of small businesses is now had with the click of a mouse.

Low-cost, common software platforms have given small businesses access to the same spreadsheet, word processing, email, and other sophisticated software as Fortune 500 companies. Computers now cost less than the chairs some of their users sit in.

Today's home-based businesses have better communication capabilities than the largest corporations had less than a generation ago. Fax, email, voice mail, cell phones, conference calling, multiple landlines, and even VOIP are readily available to the smallest business.

Impact:
Small businesses are seldom on the cutting edge when it comes to a new technology. But they are often quick to recognize its value once the bugs have been worked out and costs drop. Small size gives them the agility to rapidly adopt any technology that delivers a competitive edge.

Look for falling software and hardware prices to continue give small businesses a level playing field and in some instances a clear advantage -- especially in niche markets.

As small businesses experience the advantages of rapid technological advancement, they become more likely to be customers for the "Next New Thing." They may not be the first buyers, but savvy small businesses will be close on the heels of early adopters. Savvy sellers of the latest tech will be looking for ways to take their products and services to the small business market more rapidly than ever before.

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Trend: Small Businesses Pick Niches

Business specialization and niche markets will grow in importance as small businesses first identify and then scurry to serve narrower slices of traditional markets. Outsourcing, the Internet, and customer demand, will help shape niche markets and dramatically change the business landscape.

Outsourcing will fuel the drive to specialization. A new PR firm, for example, will be unlikely to start out as a full-service practice. Instead, specialization in a niche such as investor relations will be seen as the way to gain entry to lucrative markets.

The Internet's global reach will enable wider acquisition of customers. Small businesses will find taking their specialized strengths further a field to be a more viable growth strategy than broadening their offerings in a geographic market.

Customers will continue to ask for more as small businesses proliferate. When there is a Mexican restaurant every five miles, outstanding burritos and tacos won't be enough to assure success. Instead, the menu will offer "secret" recipes from a small mountain village where early Mexican food is prepared as it was hundreds of years ago. The center of the restaurant will be a plaza where the dishes are prepared over open fires using authentic cooking stones. Diners will stroll the plaza sampling the dishes of their choice.

New niches will grow out of existing specializations that are sliced and diced into ever finer segments. Few small businesses are the first entrants in their markets. Studies show that the vast majority of small businesses are not started with a new invention or unique idea. They are far more likely to put a different spin on an existing product or service.

Impact:
Specialization will increasingly be the name of the game in small business, and specialization begets more specialization. Service providers and vendors will need to be able to show how they'll deliver superior results for each niche market into which they are selling.

The effort to reach narrower and narrower targets will make channel partners more important than ever. Cross-referral relationships will become critical in many markets.

For those selling in the small business marketplace, recognizing the impact of greater specialization and narrower niches will be a make-or-break process. The fast changing small business market of tomorrow will require increasingly rapid responses to customer needs and wants.

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Trend: Small Business Market Goes Global

The world is shrinking, and small businesses have noticed.

Taking advantage of instant communication, product delivery measured in days, and falling trade barriers, small businesses will become more global. The Internet and the proliferation of cheap, easy communications technology (cell phones, lower long distance rates, email, instant messaging, VOIP) are a big part of the enabling of small business in the global marketplace. Worldwide delivery services have contributed by lowering shipping time and costs.

Cross-border markets that were once the domain of only the largest corporations will be open to any size enterprise. National boundaries and oceans will no longer hem in the ambitions of small businesses.

The U.S. Small Business Administration reports that 97% of U.S. exporters qualify as small businesses. But the influence of globalization will be felt on more than sales. Suppliers to U.S. small businesses will increasingly be located in other countries. Small businesses are already outsourcing software development, preparation of tax returns, and the manufacture of goods. Look for all of these to increase and for new areas to open up.

Impact:
Expect a huge increase in translation services, import/export specialists, and other services to help smaller enterprises find partners and do business across borders. English will continue to be the lingua franca of business around the globe. But the ability to communicate in the languages of the markets into which you sell will be as sought-after competitive edge.

International outsourcing has become common in larger companies. But in tomorrow's world, U.S. small businesses will become important users of offshore outsourcing.

Capital markets will open up. Technology developed in one country increasingly will be funded by investors in other countries. Look for this to increase the investment of the U.S. and other first-world countries in developing nations. Also, look for a rise in the number of facilitators of investment and other transnational business activities.


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